When market analysts Frost & Sullivan first looked at
the global market for wireless local loop (WLL) back in 1998, the top
players were Ericsson (with 23 per cent), followed by Alcatel (14); Siemens
(10); Tadiran (10) and Motorola (9).

Subsequently (1999 figures) Ericsson is still top (16
per cent), followed by Alcatel (13), Siemens, Motorola, Qualcomm (before
the Ericsson purchase) all with 11 per cent, followed by Lucent (10) and
Nortel in seventh place (with 9 per cent). These figures also show that
CDMA-based technology has carved a major share in the WLL market in just
twelve months, with three of the top six suppliers offering CDMA solutions.
Commenting on this shift, Brian Cotton, director of consulting with Frost
& Sullivan says: "CDMA has come to the forefront. I see the primary reasons
as being its capacity and scaleability. In particular it suits the smaller
operators."

Mallinson agrees that the majority of the WLL systems
with which his products compete are CDMA-based offerings, "because the
industry as a whole has recognised that CDMA is the superior technology
and is therefore able to overcome the limitations of rival products based
on alternatives such as TDMA."

The prospects for all WLL suppliers have not met the
expectations raised a few years ago. Frost & Sullivan originally predicted
that revenues for WLL would reach $8.8 billion by 1999. That figure has
two years later been revised downwards to $3.1 billion.

So what happened to WLL? The 1997 Frost & Sullivan report
identified several major impediments to the rapid growth of WLL against
traditional fixed wire alternatives. These included: delays in spectrum
allocation; incumbent alternate technologies and under-educated consumers.
Another theory is that the WLL industry was geared too much towards selling
to developing nations and was particularly badly hit by the recent Asian
crisis.

One company which made strenuous efforts to become a
serious player in the wireless local loop arena is Pennsylvania-based
InterDigital Communications Corporation (IDC). IDC forged alliances to
promote its proprietary Broadband-CDMA (B-CDMA)-based technology with
several world-leading telecommunications players including Alcatel, Samsung,
and Siemens. According to Rip Tilden, executive vice president with InterDigital,
the initial systems trials for B-CDMA went very well. "The technology
itself performed beautifully," Tilden explains. Despite this, there have
been few serious commercial implementations of WLL systems using IDC's
technology.

Tilden says Alcatel and Siemens "have stepped away"
from working with IDC while the company still has an agreement in place
with Samsung, but says the Korean manufacturer is "reviewing its options."
Tilden blames pure bad timing for this situation. He argues that IDC in
conjunction with its partners had targeted developing nations-particularly
in Asia-as the prime customers for their products. Hence, although the
potential customers were enthusiastic about installing WLL, the necessary
financial backing to do so simply wasn't forthcoming. Frost & Sullivan's
Brian Cotton, however, describes these events as "a bump in the road for
Asia, rather than a roadblock. There's still major interest [in selling
to] the area-particularly to China which has become something of a Holy
Grail to [WLL] manufacturers." Thus, despite having created an ASIC (custom
chip) for its B-CDMA WLL technology in conjunction with Texas Instruments,
"our prime focus is no longer on WLL although if the opportunity arose
[for a large WLL project] we could do it," Tilden says. "We're aiming
to migrate our core technology to 3G applications."

Cotton is not surprised by IDC's viewpoint. "WLL has
fallen off the radar for some vendors," Cotton suggests. "They've decided
to take a second look at how they spend their R&D dollars and 3G is looking
more attractive."

Collapse
An event which adversely affected WLL's image in the UK was the collapse
of Ionica which had set up operations in England and Scotland to utilise
its own WLL technology to compete against BT. Cotton says that Ionica's
experience caused other suppliers-like Newbridge and Siemens, for example-to
concentrate on providing broadband WLL services in Europe to the business
market "where the money is" rather than aiming the technology at the consumer
sector.

Nonetheless, Airspan's Stephen Mallinson claims that
one area his company has always been targeting in developed markets such
as Europe is the PTT with a 'universal service obligation'. In this sector,
a wireless solution becomes more economically attractive than maintaining
an installed, copper-based fixed network. "The next phase will be to go
beyond narrowband and start offering broadband services where a WLL operator
could provide the complete range of services-not just voice," Mallinson
argues.

Someone who also firmly believes that CDMA-based WLL
solutions can, and will, continue to prove competitive is Paul Jardine,
a technical architect with AMS (American Management Systems) a business
and IT consulting firm specialising in telecommunications. "As the cost
of mobile technology decreases, it is becoming more and more economic
to install 'fixed' lines using WLL," Jardine explains. "However, one of
the issues that needs to be addressed is that there is a lack of adequate
support for broadband services on both CDMA and DECT." Jardine sees the
key to ensuring that WLL systems can compete against fixed wire offerings
is to offer equal or superior services.

In today's business environment those services generally
translate into offering high-speed but low-cost Internet access. According
to Mallinson this is exactly what Airspan can achieve using its proprietary
CDMA technology. In September 1999, the company unveiled its PacketDrive
product which integrates with its CDMA WLL offering, AS4000, to provide
users with true Internet access.

Among the advantages claimed by Airspan for its PacketDrive
approach is the fact that terminals can be added to the network without
the need to make changes at the central base station. Perhaps equally
importantly, the technology is both modem-free and 'always-on'. The latter
parallels the fixed-wire ADSL style approach, where the user doesn't have
to dial up in order to establish a link-the Internet connection is always
there. Stephen Mallinson admits, however, that ADSL has a role to play
in the broadband communications market but points out that there is a
trade-off between its range and supplied bandwidth-the further away the
consumer is from the hub, the lower the bandwidth. By contrast, Mallinson
argues that, "There is no such range restriction with Airspan's WLL offering
which is able to deliver 512 kbit/s over distances as great as 25 kilometres."
He also cites UK operator BT's recent announcement that it intends to
deliver ADSL at 512 kbit/s as evidence that WLL will not necessarily be
at a disadvantage compared to fixed wire ADSL.

In fact, many WLL solutions can offer high speed data
access as well as voice capabilities. An example is Granger Telecom, a
specialist WLL supplier, whose CD2000 system employs spread spectrum,
synchronous CDMA (S-CDMA) technology. Granger maintains its service can
support a variety of high speed data and fax services including ISDN,
Internet and leased line services.

Another major player in the WLL market is Lucent Technologies
which has its own CDMA WLL solution in the shape of Airloop.
Lucent claims that the Airloop system can provide cost-effective
extended services including high quality voice, Internet access
at Basic Rate ISDN speeds and fast data and fax services.
Lucent's approach, however, is to provide potential customers
with maximum flexibility. Hence Airloop can be integrated
with Lucent's 5ESS-2000 switch which provides the opportunity
not only to integrate WLL with fixed line solutions but also
to integrate with Lucent's cdmaOne technology solutions as
well.

ECI-owned company InnoWave Telecoms (formerly Tadiran),
by contrast, offers the MultiGain Wireless (MGW) solution which is based
upon proprietary frequency hopping CDMA technology. Innowave claims its
system is capable of supplying high speed data (64 kbit/s) and Basic Rate
ISDN services. The company also argues that its technology can provide
services up to 30 kilometres away and over a very wide frequency band
(800MHz - 3.5MHz).

Partnership
Then there is AdiCom Wireless which designs and manufactures a family
of products based on proprietary A-CDMA technology. Adicom recently announced
a partnership with Slovenia-based Iskratel. The new offering integrates
the Aditus wireless access system with Iskratel's SI2000 switch, utilising
the V5.2 digital interface developed by both companies.

The result is a wireless access network capable of interfacing
with public service telephone networks utilising SS7 or R2 signalling-thereby
suitable for both developing and mature telecomms markets. "By developing
strategic partnerships with companies like Iskratel, Adicom can address
the problem of network build-out and provisioning of affordable telecommunication
services across all sectors worldwide," says Dr Adel Ghanem, president
and CEO of Adicom. He claims his company takes a "revolutionary" approach
to WLL. "Wireless local loop must serve as an extension to the PSTN and
not as a subsystem," he argues.

Paul Jardine argues: "Head to head with traditional fixed
wire, wireless local loop will have to compete aggressively on cost when
quality is an issue, although the newer broadband services can be very
attractive in their own right." He continues: "Alternatively, for PCS,
CDMA and GSM services it [WLL] can be used in bundled packages with mobile
access, offering an element of zoned billing, i.e. the customer is charged
low-cost minutes for calls made from a 'fixed' location."

Despite the setbacks, WLL should have a bright future.
In its favour, Frost & Sullivan cite WLL's high speed of deployment; its
relatively low cost for infrastructure; few barriers to entry; relatively
easy scaleability; plus the impetus from demand for Internet-based applications.
The report identifies most of the initial mistakes made by suppliers,
noting: "The majority of early strategies for vendors competing in the
market seems to be based on obtaining a foothold in many countries rather
than deeply penetrating any one country."

The report adds: "because WLL is likely to be a low-margin
business, although not a money loser, financing is important to gaining
a foothold in all the world regions."

Stephen Mallinson argues that one lesson that vendors
have learned is that WLL can be migrated from a pure data network into
a voice plus data network with no necessity for the operator to install
a new system. He claims that this is one good reason why WLL has proved
competitive in markets such as the Eastern European region where new operators
normally start out with a restricted licence to provide data to closed
user groups over private circuits and then gain a full licence to provide
competitive voice services as well.

Figures put together by the ITU, Red Herring magazine
and Airspan show that Asia will recover its original status as a prime
user of WLL technology out of a global total of 340 million. Asia will
be closely followed by Latin America, Central and Eastern Europe with
Africa being the one region where growth will be small.

Another Frost & Sullivan report adds that China represented
a major chunk of the Asian market with revenues of around
$141 million during 1998. The ITU figures look even more impressive
when the total number of WLL users (both analog and digital)
in Asia-over 30 million-are compared with the latest figures
from the CDG (nearly 25 million cdmaOne subscribers in the
region at the end of 1999). Significantly the Frost & Sullivan
report observes that "CDMA is likely to become the dominating
air interface technology for digital WLL systems."

It may also be unwise to concentrate purely on developing
markets. Not every observer writes off the North American and Western
European markets for WLL. According to Paul Jardine: "There is a small
but growing trend in the US to use the fixed line for data communications
and the mobile for all voice communications. Broadband wireless is also
becoming a very useful tool for new operators to bypass the incumbent
PTT entirely and differentiate themselves at the same time."

Total wireless local loop market revenue forecasts (1998-2005)

Year

Total ($millions)

Revenue from subscriber terminals

Revenue from base stations

Revenue from backhaul equipment

1998

1,603.0

806.3

649.2

147.5

1999

3,107.3

1,727.7

1,131.1

248.6

2000

5,480.5

3,480.1

1,688.0

312.4

2001

8,510.0

5,863.4

2,306.

2 340.4

2002

12,375.0

9,108.0

2,871.0

396.0

2003

16,211.3

12,158.4

3,566.5

486.3

2004

19,777.7

15,624.4

3,757.8

395.6

2005

23,337.7

18,903.5

3,967.4

466.8

CAGR

39.8%

48.3%

25.4%

15.5%

Note: All figures are rounded, base year
is 1999.
Source: Frost & Sullivan